ETF Strategies

Exchange-traded funds (ETFs) are growing in popularity and offer exceptional flexibility for large and small investors. These versatile funds offer a wide range of choices for investors, including hedges, options, bundles, and shorted securities, making them a solid choice for investors who want to diversify their portfolios. As with any investment, ETFs carry an element of risk. Savvy investors can minimize those risks while maximizing their potential for profit by sticking to proven ETF trading strategies.

Keep it simple


One of the best ETF strategies is the most basic; by simply replacing mutual funds that typically charge higher fees with comparable ETFs, most investors can realize significant savings while not creating major changes in their overall portfolio. ETFs can also be used to manage risk by allowing more diversification and filling gaps in investment coverage for smaller investors, making them a smart addition to most overall investment strategies.

Think international


For those investors who want to pursue a more aggressive ETF strategy, international ETFs provide exposure in a variety of world markets. Investors can select from ETFs that focus on a particular country or geographical region or diversify with a wide range of industries and regions that may not be available on the U.S. stock exchanges. The extensive selection available to investors can allow instant diversification, especially for those who intend to pursue a targeted international ETF strategy.

Outperform the market


For investors with a good grasp on current market trends, ETF investments offer numerous ways to take advantage of projected movements in long and short-term Treasury securities and hedge against potential losses at the same time. Because ETFs are so diversified, investors can even put together a portfolio that incorporates staggered maturity dates, allowing constant updating and replacement of underperforming ETF investments.

Short sales and long shots


ETFs offer an outstanding opportunity for investors to minimize losses while ensuring that they can still take advantage of any available profits. Short sales, options, and other hedge strategies provide exceptional flexibility for investors while allowing them to protect their market position and ensure profitability over the long term. ETFs offer most of the same trading options as other, more traditional investment choices and unlock some highly profitable opportunities that might not otherwise be available.

Conclusions


For most investors, ETFs represent a new arena of opportunities for profit and diversification. There is no one ETF strategy that is right for every investor; ETF strategies should be tailored to the investor's specific needs and risk tolerance. The ETF market requires careful and continual analysis in order to determine which investment mix will be the most profitable and presents the least risk to the individual investor.
Tim Ord
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Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

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